Federal Budget 2009 - Superannuation
Reduced
concessional contribution limit
The annual contribution cap has been halved from $50,000 to $25,000 for
those under age 50.
The transitional cap has been halved from $100,000 to $50,000 for those over
50.
The transitional cap applies for those who are 50 at any time in the
financial year and applies for the 2009/10, 2010/11 and 2011/12 years. From
2012/13 everyone will be subject to the $25,000 annual cap.
These changes will apply from 1 July 2009.
No change to non-concessional contribution limits
The annual cap remains at $150,000 for 2009/10 and beyond. This cap will now
be 6 times the concessional contributions cap.
Wherever possible, full advantage of the higher current caps should be taken
prior to 30 June 2009.
The Transition to Retirement strategy has not been changed but as a result
of the reduced concessional caps the benefit to high income earners has been
reduced.
The tax free status of superannuation withdrawals after age 60 has remained
in place and superannuation remains a very attractive vehicle for saving for
retirement.
Temporary reduction in Government co-contribution
The Government co-contribution scheme will be reduced to 100% of
eligible contributions for 2009/10, 2010/11 and 2011/12 income years with
the rate increasing to 125% of contributions for the 2012/13 and 2013/14
years and returning to 150% for the 2014/15 year.
| Year | Co-contribution rate | Phase out |
| 2009/10 – 2011/12 | 100% (max $1,000) | Reduces by 3.333 cents for each dollar of income above shade out threshold |
| 2012/13 – 2013/14 | 125% (max $1,250) | Reduces by 4.167 cents for each dollar of income above shade out threshold |
| 2014/15 | 150% (max $1,500) | Reduces by 5 cents for each dollar of income above shade out threshold |
Pension drawdown relief extended
The minimum drawdown relief announced in February 2009 for account-based
pensions has been extended for a further 12 months to 30 June 2010.
The reduced drawdown rates for 2008/09 and 2009/10 are as follows:
| Age | Factor |
| Under 65 | 2% |
| 65-74 | 2.5% |
| 75-79 | 3% |
| 80-84 | 3.5% |
| 85-89 | 4.5% |
| 90-94 | 5.5% |
| 95 or more | 7% |
The future of superannuation
The Australia’s Future Tax System Review Panel’s report into the retirement
income system was released with the budget. This report signals the
likelihood of big changes to superannuation.
The major recommendations of the review include:
 | increasing the age pension age to 67 years (commencing 2023 ) |
|
| maintaining the current superannuation guarantee threshold at 9% |
|
| aligning the superannuation preservation age with the current pension age |
|
| further examination into the concessional tax treatment for superannuation contributions and for salary sacrifice arrangements. |
The final version of the panel’s review will be released in December 2009.
This Budget has not taken any action to align the superannuation
preservation age with the current pension age but all other major
recommendations have been taken up.
Published : 13 May 2009